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Economic Damages Calculation

We provide expert damages calculation and have testified in multiple state and federal courtrooms.

At the Knowles Group, litigation support services can help you ascertain if the plaintiff or defendant has suffered economic damages as the result of the incident. We analyze dozens of complex variables and conduct quantitative analysis to generate accurate damage calculations. Eric Knowles also provides economic expert witness services to testify to these calculations in the courtroom.

How are Economic Damages Calculated?

While our processes to determine this vary from case to case, we have a general outline that we use for calculating economic damages:

A qualified forensic economist begins by reviewing the case and determining which factors to include in the analysis. For an employment case, these can include earnings history, education, projected earnings, fringe benefits, work-life expectancy, loss of income, life expectancy, and post-separation employment. The economic expert then conducts a records review to collect data for use in the analysis. Using objective data and economic formulas, a forensic economist can accurately calculate the economic damages to an individual or company.

Types of Cases We Work On

The Knowles Group has experience calculating economic damages in  thousands of cases throughout our 30+ years of experience. We can provide damages calculation for cases such as:

  • Accident (Personal Injury and Wrongful death) – Loss of household services, medical expenses, lost earnings, future medical expenses, lost retirement, property damage
  • Medical Claims – Malpractice claims, medical expenses, employment damages, mis diagnosis, birth injuries, surgical errors, failure to treat, product liability, delayed diagnosis
  • Toxic Torts – Consumer products, occupational exposure, asbestos, mesothelioma, home exposure, shortened life expectancy
  • Employment – Earnings history, projected earnings, fringe benefits, lost retirement,  loss of income, wage growth
  • Business / Commercial – Lost profits, intellectual property, expected value, projected revenues, present value, risk factors
  • Real Estate – Property disputes, construction damage, inflation, taxes, appraisals, valuation, business loss, commercial real estate

Employment Damages Calculation

Records Review

A records review will give us an idea of what the plaintiff’s past employment and earnings capacity looked like, what their future mitigating or alternative employment looks like, and what are the most reasonable employment opportunities. The answers to these questions and more will start to become apparent as we begin to review all records relevant to our economic analysis.

We’ll also examine the plaintiff’s answers to the defendant’s requests, the depositions from the plaintiff, and personnel records as we try to piece together a pre-incident picture of the individual. While damage calculations can stem from several components, our experience allows us to produce a realistic economic value of the individual or business, both before and after the incident.

The records review process can take us several hours to several weeks, depending on the amount of information that we have to go through. As we move forward with our review, we try to get an innate understanding of what the overall compensation picture looks like on an annual basis. We’ll also review personnel records to determine what fringe benefits look like.

Earnings Capacity & Earnings History

We have over 30 years of experience and understand how important it is to thoroughly and accurately assess the earnings potential of an individual. We retrieve from a wide range of accepted data sources and supplement that with other expert opinions and assumptions to paint an accurate pre- and post-incident picture of the individual.

The first step to determining earnings capacity for an individual is to analyze their past earnings. Earnings history can include various public and private records but not limited to:

  • Earnings History
  • Federal/State Tax Returns
  • W2 Statements
  • Social Security Administration
  • State Unemployment
  • Payroll Records

From the records review, we can develop intelligent insights into the earnings capacity of the individual as we try to determine the economic damages they sustained. This is paramount to past and future loss calculations as we try to ascertain how much the person was compensated on an annual basis.

For example, with a 63-year-old male, we will most likely have years of earnings history with a mature career arc.

But what if the plaintiff is an 8-year-old girl?

In this case, a records review won’t help us determine her potential earnings capacity. Instead, we’ll have to look at statistical and objective government survey data to get an idea. The U.S. Census survey and other sources can also provide earnings data that’s segmented by education.

We can also look to the parents for potential earnings for the child, adolescent, or young adult. There is no stronger correlating factor for the child’s future education and earnings capacity than the mother and father.

Calculating Business Damages

For P&L calculations, we look at the past Schedule C, or 1120S returns to project future income. Based on these available records, we can determine how an owner or company performed up until the incident date as well as during the past loss period. Any actual earnings must offset projected pre-incident income. We will provide a present value in today’s dollars on any loss of future cash flows to the business. .

The elements that we take into consideration are:

  • Lost income – Income lost as a direct result of the event or incident.
  • Other lost earnings – Effects of the damaging incident on the cost of labor, pensions, royalties, dividends, or interest.
  • Fringe benefits – Health insurance and retirement benefits.
  • Misc. expenses – Medical, dental, or rehabilitation expenses. Cost of medical equipment or hiring household services providers such as a maid, gardener, or caretaker.

Do you need help calculating economic damages for your case?

We Can Testify to Economic Damages

In addition to objective data, records, historical averages, and other government data, we can also lean on other sources of information, such as vocational experts. Through various data points and expert opinions, we can present a reasonable case in which a person can do x, y, and z in the future, whether through re-education or retraining.

Eric Knowles has been providing expert economic witness testimony for well over ten years. He carries on the successful tradition of his father, David Knowles, PhD., who started the business in 1979.

He has provided his services as an expert witness by providing economic damage and P&L calculations in both state and federal court. He’s been retained on matters in multiple states such as:

  • Washington
  • Idaho
  • California
  • Alaska
  • Hawaii
  • Oregon
  • Montana
  • Utah
  • Nevada
  • Illinois

Expert in Calculating Economic Damages

An expert economic witness can help paint an accurate picture of the financial state of the plaintiff before and after the incident. They will also help project past and future income and earning potential.

At The Knowles Group, we’re one of the top economic consulting firms in the U.S. and have testified in multiple state and federal courtrooms on behalf of both plaintiff and defense.

If you are looking for a financial or economic consulting firm to help calculate economic damages, give us a call at (206) 860-9477 or contact us via our website to learn more about the services we provide.

Economic Damages Cases We’ve Worked On

Medical malpractice case involving fisherman with Hodgkin’s Lymphoma

Medical malpractice case involving fisherman with Hodgkin’s Lymphoma

A 26-year-old male who had developed Hodgkin's Lymphoma was making a claim of Negligence and Medical malpractice against an Alaskan medical facility. Economic damage components of the case involved the alleged diminishment to the future earnings capacity. Plaintiff had continued working in the demanding fishing industry with physical constraints. Due to his age, proposed mitigation included returning to school and attaining his degree. Key assumptions in the case included an adjusted work-life expectancy at the completion of his degree, age earnings data for males with a college degree, and the tuition costs and fees for school. The economic analysis also included calculating the future lost profits for the plaintiff's hypothetical fishing business (captaining his own vessel).

Wrongful death claim with Complaint of Medical Malpractice and Delayed Diagnosis

Wrongful death claim with Complaint of Medical Malpractice and Delayed Diagnosis

The case involved the patient developing colon cancer over a period of several years and two separate hospital facilities in Southwest Alaska and Anchorage. The decedent was retired and as a result there was no loss of earnings component to the wrongful death claim. One of the unique components to the case was the valuation of subsistence as the decedent provided food for the household through hunting and fishing. In order to properly value this lost subsistence to the surviving spouse, an estimate was made for the cost of food for the household at this rural Southwest location. Next, the analysis would go on to assess as to how much the subsistence would offset the household's cost of feeding and heating the household. The other loss component was household services offered by the decedent for the family. Objective survey data when available is to be utilized by the forensic economist and in this case, we had well-established publishers of household services data and household maintenance hours, isolated by gender, age and family dynamics. These household hours are monetized with the average hourly rate of pay one could expect to pay a third party to provide those services in the home for the surviving spouse. Household hours were reduced by the number of hours that would benefit the decedent and the reduction in family size. Consideration for normal life expectancy and fully-functioning healthy life expectancy for this Alaskan Native was a key assumption for the analysis.

Wrongful death matter and complaint of Medical Malpractice involving Alaskan hospital facility

Wrongful death matter and complaint of Medical Malpractice involving Alaskan hospital facility

This case involved a wrongful death matter of a retiree who developed advanced stage liver cancer. My services included assessing any lost value of pension to the surviving spouse from the decedent's TRS (Teachers Retirement System) benefits. This component to the analysis included projecting the decedent's personal consumption (spending) of his own pension benefit and compare the pre-incident net pension benefit to the resulting surviving spouse pension benefit. The other component to the analysis was calculating any loss of household services to the surviving spouse. This process includes utilizing objective 3rd party survey data for the average number of hours we would expect the decedent to work in the maintenance of his home (assuming similar age, employment and family dynamics). The average future hours that would have been performed by the decedent are monetized using an average hourly wage that the surviving spouse will have to pay a 3rd party to perform these services. Household survey hours must be reduced for the number of hours that would have benefited the decedent only and the reduction in household size. Some of the other key assumptions in the case were the rate of consumption and the decedent's fully functioning health life expectancy.